European shares set for first weekly rise of 2016, buoyed by oil

LONDON/MILAN, Jan 22 (Reuters) - European equities rallied
sharply on Friday and were set for thir first weekly rise this
year, with higher commodity shares helping to add to gains from
the previous session after stimulus hints from the ECB.

The pan-European FTSEurofirst 300 was up 3 percent
at 1,332.67 points by 1216 GMT, up 2.8 percent for the week, the
first weekly rise of 2016 and the biggest gain on a weekly basis
since November.

The index extended a rally from the previous session, when
it gained 2.1 percent after European Central Bank head Mario
Draghi said financial markets turmoil and concerns over China
would prompt a review in March of the bank's monetary policy.

On Friday, the oil sector led gainers, up 5.4
percent, after a rally brought crude prices back above the key
$30 mark, as cold weather as well as firmer financial markets
gave traders reason to cash in on record short positions.

Oil was still set for its biggest January fall in 25 years,
which has seen the sector hit its lowest level since 2003 this
week.

"Markets have seen a dramatic shift in sentiment in the
space of a few days," said Jasper Lawler, market analyst at CMC
Markets, adding that recent volatility in oil prices would keep
equity investors nervous.

"The rally in stocks (on Friday) is more about the oil price
than hopes of stimulus from the ECB. That puts it on shaky
ground."

Shares in oil majors Total, Royal Dutch Shell
and Eni were up between 4 percent and 5.6
percent.

Miners were the also among the top gainers, up 3.1
percent, as metal prices rose.

In spite of the gains the FTSEurofirst 300 is down more than
7 percent since the start of the year and some investors
remained cautious saying the rebound could be short-lived.

"More action will be needed by other central banks like the
BOJ and the PBoC in order to bring much needed long-term calm
and optimism back into the markets," said City of London Markets
trader Markus Huber, referring to Japan and China.

Delhaize also rose, by 2.5 percent, on solid
results. German software maker SAP was flat, giving up
earlier gains as some brokers said its new 2017 target was no
big surprise.
(Reporting by Danilo Masoni; Editing by Toby Chopra)